Renwanz Insurance & Financial Solutions, Carlsbad, CA
Yes, you can contribute to a 401k and IRA in the same year. If your employer is providing a match for your 401k, it might be a good strategy to put in enough to qualify for the full employer match before contributing to an IRA.
There are income qualifying rules for the traditional IRA. For married filing jointly or qualifying widow(er) and your modified adjusted gross income (MAGI) is less than $181,000 you can contribute up to $5500 (over age 50 the contribution limit is $6500). If your MAGI is between $181,000 and $191,000 your contribution amount is reduced.
For single, head of household or married filing separately and you did not live with your spouse at any time during the year, if your MAGI is less that $114,000 you can contribute up to $5500 (over age 50 the contribution limit is $6500). If your MAGI is between $114,000 and $129,000 your contribution amount is reduced.
Traditional IRAs have a maximum age contribution limit of 70 ½ and you must begin Required Minimum Distributions (RMDs) by April 1 of the year following the year in which you turned age 70 ½. Roth IRAs have no age limits for contribution and have no RMD at age 70 ½. This could mean you have two RMDs in the same year.
If you or your spouse participates in an employer sponsored retirement plan such as a 401k, the ability to deduct a contribution to a traditional IRA hinges on what your MAGI is on your tax return along with your filing status. There are some rather complicated formulas that relate to this and you should definitely seek advice from your tax preparer on anything tax related.
As always, you should consult with a qualified financial professional when considering financial products and strategies for retirement income.
That is an excellent question! Not only can you, but you should! It is an excellent strategy to maximize as much as you can afford to the amount you can contribute to your retirement funds. Contribute as much as you can to the 401 to earn the employer match, it's free money, in a way, and you should take advantage of it. Your Roth will allow $5500 a year ($6500 if you are 50+) and after your 401, contribute as much of that as possible. The earlier you start, the better, and by maximizing your contributions now, it will help balance out when the time comes that money is a little tighter, and you can't contribute as much. Thank you for asking!
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There are income qualifying rules for the traditional IRA. For married filing jointly or qualifying widow(er) and your modified adjusted gross income (MAGI) is less than $181,000 you can contribute up to $5500 (over age 50 the contribution limit is $6500). If your MAGI is between $181,000 and $191,000 your contribution amount is reduced.
For single, head of household or married filing separately and you did not live with your spouse at any time during the year, if your MAGI is less that $114,000 you can contribute up to $5500 (over age 50 the contribution limit is $6500). If your MAGI is between $114,000 and $129,000 your contribution amount is reduced.
Traditional IRAs have a maximum age contribution limit of 70 ½ and you must begin Required Minimum Distributions (RMDs) by April 1 of the year following the year in which you turned age 70 ½. Roth IRAs have no age limits for contribution and have no RMD at age 70 ½. This could mean you have two RMDs in the same year.
If you or your spouse participates in an employer sponsored retirement plan such as a 401k, the ability to deduct a contribution to a traditional IRA hinges on what your MAGI is on your tax return along with your filing status. There are some rather complicated formulas that relate to this and you should definitely seek advice from your tax preparer on anything tax related.
As always, you should consult with a qualified financial professional when considering financial products and strategies for retirement income.